US says Google pays $10bn a year to maintain search dominance

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US prosecutors alleged Google pays more than $10bn annually for agreements that ensure it is the default search engine on mobile phones and computers, as the most significant antitrust monopoly trial in 25 years started in Washington.

“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” Kenneth Dintzer said during the Department of Justice’s opening statements in a case accusing Google of dominating internet search via anti-competitive agreements.

Dintzer said the tech group in 2010 began to “illegally maintain” the monopoly it had established. It currently represented about 89 per cent of the internet search market, he added.

During Google’s opening statement, a lawyer for the company, John Schmidtlein, a partner at Williams & Connolly, argued the “competitive pressures” it faces in search “have never been more varied or significant”.

“Plaintiffs’ claims seek to distort search competition . . . all in the hopes that forcing people to use inferior products in the short run will somehow be good for competition in the long run,” he said. “US antitrust law does not countenance such radical market intervention, and for good and sound economic principles.”

It is the most high-profile monopoly trial since the DoJ accused Microsoft in the 1990s of seeking to quash then-pioneering web browser Netscape with its Windows dominance and a critical test for the tougher antitrust stance that enforcement agencies have taken in recent years.

A new generation of progressive officials appointed by President Joe Biden — including Jonathan Kanter, the head of the DoJ’s antitrust unit — have vowed to rein in Big Tech. They argue insufficient legal challenges in recent decades have allowed anti-competitive conduct to proliferate across the US economy.

Kanter, who was in the Washington courtroom on Tuesday as an observer, inherited the Google case from the Donald Trump administration, which first filed it in 2020.

The DoJ’s complaint alleged Google sidelined competitors by paying wireless carriers, browser developers and device manufacturers billions of dollars via deals that ensure its search engine features prominently on mobile phones and computers.

Google has argued it offers a good product that the public chooses to use. It has also said the agreements in question are mainly set by its counterparts such as Apple or Samsung and that other players can join the bidding process.

Judge Amit Mehta, who is hearing the case, asked Schmidtlein on Tuesday to respond to the DoJ’s argument that the combination of Google’s scale and its default agreements quashed competition, making it the only viable option.

Schmidtlein replied: “This court cannot intervene in the market and say ‘Google . . . you have the best product, the best quality . . . but I’m sorry you can’t compete to be the default’. That is an anathema to US antitrust law.”

During his opening statement, the DoJ’s Dintzer outlined details of Google’s agreement with Apple that made its search engine the default in Apple’s Safari browser. The government alleged that in response to amendments proposed by Apple, Google told the company it could not pursue changes and threatened to scrap the deal’s ad revenue share provision.

“This is a monopolist flexing,” Dintzer said.

Apple did not immediately respond to a request for comment.

To prevail at trial, “it is not enough for the DoJ to show that Google is very large or that its competitors have struggled to make inroads against it”, said Sean Sullivan, professor at the University of Iowa College of Law. “The government bears the burden of showing that Google has maintained a monopoly position through anti-competitive conduct.”

The government alleged Google’s monopoly extended to ads, accusing it of raising prices by “manipulating” auctions for search ads. Federal prosecutors also claimed the tech company hid evidence and destroyed documents for years. The DoJ cited a message from Google chief executive Sundar Pichai asking colleagues to change the settings of a group to “history off”, a request he later allegedly deleted. 

“They turned history off . . . so they could rewrite it in this courtroom,” Dintzer said. The company has said it has provided more than 5mn documents in the case and did not immediately return a request for further comment.

The DoJ said most of its witnesses in the bench trial, which is expected to last about 10 weeks, will be current or former Google employees as well as individuals affected by the tech company’s conduct. Google said its witnesses will include its staff as well as senior executives from counterparties to its agreements, such as Samsung, Motorola and T-Mobile.

Apple previously failed to stop three of its top executives from being called to testify, including Eddy Cue, head of its services business.

The DoJ in January filed a separate antitrust lawsuit against Google for dominance in the digital advertising market, one of multiple cases that antitrust enforcers in the Biden administration have brought in an effort to counter Big Tech.